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China's Economic Growth Slows in First Quarter
15:29
HONG KONG — China’s economy grew more slowly than usual in the first quarter and joblessness increased, but strong investment spending and retail sales helped prevent falling exports from dragging down economic output even further, according to government statistics released Thursday.
China’s economic output was 6.1 percent greater in the first quarter of this year than a year earlier, the National Bureau of Statistics said, warning in a statement that this had led to some increase in unemployment. But retail sales, industrial production and urban fixed asset investment were all stronger than expected in March, in the latest signs that the worst of China’s difficulties might be behind it.
That China’s annual growth rate appeared slow in the first quarter, from 6.8 percent in the fourth quarter of 2008, was partly because it was being compared to the Chinese economy’s formidable output in the first quarter of last year. Many factories were operating with extensive overtime then and inflation was approaching double digits despite considerable efforts by Chinese officials to rein in the economy and prevent it from overheating.
Using another measure of economic growth – the annualized rate of growth from one quarter to the next – China’s economy actually accelerated during the first quarter of this year. Qu Hongbin, a China economist at HSBC, calculated in a research note that using this measure, the Chinese economy was growing at an annual rate of 6.2 percent in the first quarter, compared with just 2.5 percent in the fourth quarter of last year.
“Real demand has been meaningfully stimulated, and more liquidity is financing real growth,” he wrote.
Chinese economic output data is sometimes less reliable during times of economic stress, however. Academic and Western economists have done studies over the years finding evidence that the Chinese government tends to smooth its quarterly economic data, underestimating the gains during booms and the losses during downturns.
The National Bureau of Statistics mentioned joblessness briefly in a statement on Thursday, but provided no new details. The official unemployment among urban workers who are still living in the city in which the government originally registered them edged up to 4.2 percent in the fourth quarter after hovering at 4 percent since the summer of 2007.
But that politically sensitive figure excludes more than 100 million workers who have previously migrated from rural areas or between cities to find jobs, often in the export sector, and are now feeling the brunt of dismissals.
China’s huge export sector, which led the economy to double-digit growth for much of the past decade, remained a formidable drag on the economy during the first quarter of this year, tumbling 20 percent from a year earlier.
Many Chinese business executives at the opening of the Canton Fair on Wednesday in Guangzhou said that they were trying to sell more in their home market after concluding that overseas markets were far weaker.
China’s economic stimulus measures, from a record surge in bank lending to heavy government spending on new rail lines and other infrastructure, have started to increase the level of domestic investment; many economists expect an even stronger effect from the stimulus measures to show up in data for the second quarter, particularly given that urban fixed asset investment jumped 30.3 percent in March from a year earlier.
Joe Zhang, the general manager of the Famous Grand M & E Equipment Company Ltd., which manufactures welding equipment for the assembly of boilers at factories, said that his attention was increasingly on buyers in China, not those on the other side of the world.
“We sell a lot to the domestic market, and with the stimulus program, our sales are up from a year ago by 10 percent,” he said.
With the Chinese data roughly in line with expectations, there was little immediate reaction in financial markets. The Shanghai A-share market was down 0.14 percent in late morning trading Thursday, and the Hang Seng Index in Hong Kong was up 0.08 percent.
